Despite the challenges, the FBR has seen a rise in income tax returns filed by the retail sector, although many still file nil returns to avoid higher withholding tax rates.

The State Bank of Pakistan plans to fully implement a digital payment system over the next five years to enhance financial inclusion.

Structural reforms are being implemented in taxation, energy, state-owned enterprises, and public finance, with a major overhaul of the taxation system underway.

The IMF identifies Pakistan's inability to generate sufficient revenue as a key macroeconomic challenge affecting its economy.

The Chainstore Association of Pakistan noted that only 10% of the formal retail sector is tax-compliant, creating unfair competition with the informal sector.

AI will be employed to enhance tax collection, targeting an estimated Rs9.4 trillion in cash circulation in the informal economy.

Recent improvements in Pakistan's economy include currency stabilization, increased foreign exchange reserves, and declining inflation rates, with the policy rate dropping from 23% to around 11%.

IMF Resident Chief Mahir Binici highlighted a disproportionate taxation burden on the formal sector, exacerbated by some sectors not contributing to national revenue.

Finance Minister Muhammad Aurangzeb stated that the retail sector contributes only 1% of the tax despite accounting for 19% of the GDP, indicating a need for reform.

The government is pushing for formalization of businesses to ensure fair tax contributions, stating that free riders are no longer acceptable.

The IMF team is scheduled to visit Pakistan on February 24, 2025, to discuss a climate resilience fund, with expectations of $1 to $1.5 billion in funding.

Foreign investors are showing renewed interest in Pakistan, leading to increased institutional investment in both debt and equity.